Austrian company Red Bull GmbH is terminating its marketing activity in Israel
and downsizing Red Bull Israel to a minimum due to the ongoing decline
in the energy drink brand's market share.
Fifteen of the company's employees in Israel have been fired, leaving just the CEO and sales director. In addition, Red Bull's advertising budget has been canceled.
The company's agreement with the Binyamina Winery, which has served as Red Bull's distributor in Israel in the past few years, has been terminated as well. Beverage wholesalers wishing to sell Red Bull in Israel will now have to order at least one container of the drink directly from Austria.
Red Bull previously controlled 80% of Israel's energy drink market, but its market share plunged to just 6% in 2011. According to the StoreNext retail information service, the Israeli energy drink market is currently controlled by the XL and BLU brands.
Global Red Bull has decided that the drink's market share in Israel does not justify the millions of dollars a year invested in the sales promotion and advertising activity performed in the country.
"Following the launch of cheap local brands, Red Bull realized that the Israeli consumer is unwilling to pay a premium for an international brand," a senior source in the beverage industry told Yedioth Ahronoth.
"Israelis see no difference between the local brands and Red Bull, and it’s the money that talks: While a can of Red Bull is sold in Israeli supermarkets for an average price of NIS 6 ($1.60), the other brands are sold for just NIS 4 ($1.10)."
Yet according to a source close to the company, the decision not to completely shut down the company's Israeli subsidiary is a show of faith in the Israeli market.